traditional IRA withdrawal taxed as ordinary income or ?

[Deleted]

I have over 240k in capitol loss carry over still from the stock market crash of 2000.  In 15 years or so when I start to withdraw from my traditional IRA (that was converted from a 401k back in 1999) will I be able to offset any of the capitol gains, or will the entire traditional IRA be treated as ordinary income? 

I know about the 3k per year offset to ordinary income but I am in my 50's and do not think I will live 80 more years to work it out.  When I pass can my estate continue the offset against income or does it all disappear upon death?

  I have 10 rental properties that will provide income through my lifetime and for my children to enjoy after I am gone.

Is there a possibility to sell some property to my kids at a loss and they start with a lower basis than they would have if the property was appraised at my death?  Or will that cause them to have a higher tax bill someday?  I do not want to shift the tax burden onto them.  The market value today is about 120k less than I paid on one of the properties but the rest are close to par or worth well above what I purchased them for.

note; Married, total estate about 2 million in todays dollars and I am in good health and hope to live 20 or 30 more years from now. The wife will likely outlive me by ten years or more.

I know this is alot to ask and if it is too confusing the moderator has my permission to delete these questions.

Thank You

[mwcpa]

"will I be able to offset any of the capitol gains, or will the entire traditional IRA be treated as ordinary income?"

The way the law is written today only 3K in "excess" capital losses can be claimed each year.  Any amount above the 3K is carried to the next year and available to offset any future gains and the same 3K rule comes into play.  IRA distributions are "ordinary income"... no special capital gains treatment, no special dividend treatment....

"When I pass can my estate continue the offset against income or does it all disappear upon death?"

Assuming you file a joint return with your spouse the capital loss continues with them.

"Is there a possibility to sell some property to my kids at a loss and they start with a lower basis than they would have if the property was appraised at my death? Or will that cause them to have a higher tax bill someday?"

This is a complicated estate planning issue.  Given your age and need for the income stream I would not be thinking about selling property to children at this point.  If these properties is worth less than the adjusted cost basis and you sell it to a third the loss, known as a 1231 loss, is fully deductible.  If you sell it to your children you cannot claim such loss.

You should really set up a meeting with a local qualified tax professional to review your overall tax situation.  An effective plan may be developed with all of the facts to help you gain benefit of the capital losses and other matters over time.

[SVT]

I have over 240k in capitol loss carry over still from the stock market crash of 2000.

I know about the 3k per year offset to ordinary income but I am in my 50's and do not think I will live 80 more years to work it out.

Based on 240k of losses you claimed, you had a nice sized taxable account invested in stocks at that time.  Did you sell everything and never went back into the market in your taxable account to be able to offset future gains in that account?

[Deleted]

I started in the market in 1997 with a small amount and like many people I did very well for a few years.  Paid taxes on large gains in 97, 98 and 99 only to lose most of it in 2000.

I have always kept some money in the stock market.  After losing big in 2000 I changed course with my after tax money and purchased real estate.  I thought I would flip eventually but I have become very attached to it all and turned it into a rental portfolio.

I do have aprox. 300k in pretax money still in the stock market. 2/3 in mutual funds and 1/3 actively traded as well.  The part that I trade would be considered risky by most people.

I just do not like the fact that I paid taxes on all the gains and now have no way to write off the carried loss.

I am just hoping to balance it out somehow during my lifetime.  It would be nice if congress would up the annual amount against ordinary income from 3k to 10k or more.

[mwcpa]

realtor....

with a "rental real estate" portfolio in your non tax defered investments if you ever become not attached to the properties any gain would be reduced by the carry over capital losses, so all is not lost.

the "$3,000" limit issue has been brought up a number of times over the years.  It is one of the areas that has not been indexed for inflation (the dollar has been the same since the 1970s).  But, over the years profits on capital gains have been granted special tax treatment, so with a good a bad must offset it.  a couple decent read on the topic... little old, but still of value

www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2009/Tax/LossLimitation.jsp
www.law.umaryland.edu/marshall/crsreports/crsdocuments/RL31562_10092002.pdf

[TheOtherMe]

The carry over of capital losses dies with you.  It's one of the things you can't take with you.